Interim / Quarterly Report • Jul 19, 2016
Interim / Quarterly Report
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JANUARY - JUNE
During the second quarter of 2016 we reach a new record of SEK 232 m corresponding to a 32 % increase in net sales. The increase is partly organic with 7 % due to improving market conditions and partly the result of getting the full effect of the acquisition of eWON.
During the second quarter we can also report a positive change in the product mix improving our gross margins. This in combination with a cautious approach to new investments in resources resulted in higher operating result during the second quarter of 2016.
The Netbiter product group, which in the future will be a part of the eWON brand name, shows a sales increase of 57 % during the first six months – still from low volumes. With additional market leading products from eWON we strongly believe that this area of the HMS product offer now will be able to develop even better going forward.
At the end of the second quarter HMS acquired the Spanish company Intesis Software S.L. Intesis´ know how in the area of building automation, and their well-established solutions in this market segment will become an important addition to HMS growth strategy. Intesis strong market position in solutions for system integration and building automation will become a good addition to HMS ´existing product offer. Through the acquisition of Intesis HMS will gain a strong position with good opportunities to growth in the market segment building automation. Intesis is a well-established company with good reputation which, as well as the newly acquired eWON, will further strengthen HMS´ unique value proposition towards manufacturers of industrial products and machines as well as system integrators and installation providers globally.
During the first six months of 2016 we have initiated the integration of sales and marketing resources in eWON with the existing organization of HMS for our brand names Anybus®, IXXAT® and eWON®. On a long term perspective we also see good opportunities to coordinate technology and development projects in the acquired operations. This is expected to give a positive effect on future generations of products provided by HMS.
Our focus is now on achieving the full effect of the possibilities we see in the newly acquired operations as well as the investments we have made during previous years.
Despite the increase in order intake we still see some of the uncertainty in the market development we have previously reported. We still see a good inflow of new design-wins for our products which in the long term will strengthen HMS' position on the market.
The German and Japanese markets continue to show a good development. On the US market we still have a mixed picture and cautious market. But during the last quarter we have received a couple of larger customer project which gives us good hopes for the future.
An increase in amortization of intangible assets, acquisition costs and investments in more resources mainly in the area of sales and marketing has a negative impact on the first six months result.
Our focus is to continue to drive growth within our three product brands. We continue to balance our long term growth strategy with a cautious approach to costs. In the long term, we believe that the market for industrial communication and remote monitoring will be an interesting growth area, and we continue to focus on our motto "HMS - Connecting Devices".
"With the acquisition of Intesis during the second quarter HMS will have a strong position and a good possibility to grow in the area of building automation."
Staffan Dahlström, CEO, HMS Networks AB
Net sales for the last twelve months amounted to SEK 788 m (655) corresponding to a 20 % increase. In total, the depreciation of the Swedish currency in relation to the major HMS currencies had a positive effect on net sales by SEK 19 m compared to the previous twelve-month period. Order intake for the twelve-month period amounted to SEK 783 m (655).
Net sales for the first six months 2016 was SEK 433 m (347), corresponding to a 25 % increase compared to the same period during the previous year. Currency effects had no impact on net sales during the first half year. During the first six months the acquired company eWON contributed with SEK 71 m to net sales. Order intake for the first six months increased by SEK 102 m to SEK 447 m (345), of which SEK 438 m (331) is expected to be delivered during the next twelve months.
Net sales for the second quarter 2016 was SEK 232 m (177), corresponding to a 32 % increase compared to the same quarter during the previous year. During the second quarter the acquired company eWON contributed with SEK 43 m to net sales. The Spanish company Intesis Software S.L. was acquired during the latter part of the second quarter. The acquired operations had no effect on the net sales of the Group during the period. Order intake for the second quarter increased by SEK 77 m to SEK 247 m (170).
Cash flow for operating activities per share
The graph shows turnover per quarter on the bars referring to the scale on the left axis. The line shows turnover for the latest 12 month period referring to the scale on the axis to the right.
| Quarterly data | Q2 2016 |
Q1 2016 |
Q4 2015 |
Q3 2015 |
Q2 2015 |
Q1 2015 |
Q4 2014 |
Q3 2014 |
|---|---|---|---|---|---|---|---|---|
| Net sales (SEK m) | 232 | 201 | 175 | 180 | 177 | 170 | 156 | 152 |
| Order intake (SEK m) | 247 | 199 | 157 | 180 | 170 | 174 | 162 | 148 |
| Gross margin (%) | 60.9 | 59.2 | 60.5 | 59.9 | 62.2 | 62.4 | 62.0 | 63.0 |
| EBITDA (SEK m) | 44 | 30 | 23 | 40 | 33 | 40 | 26 | 44 |
| EBITDA (%) | 18.8 | 14.8 | 13.1 | 22.2 | 18.6 | 23.4 | 16.5 | 29.0 |
| Operating profit (SEK m) | 35 | 20 | 14 | 31 | 24 | 32 | 18 | 37 |
| Operating margin (%) | 15.0 | 10.1 | 8.2 | 17.3 | 13.7 | 18.7 | 11.5 | 24.4 |
| Return on capital (%) | 18.4 | 9.9 | 3.0 | 17.9 | 13.7 | 20.4 | 8.8 | 26.0 |
| Earnings per share (SEK) | 2.20 | 1.08 | 0.31 | 1.75 | 1.32 | 1.95 | 0.81 | 2.28 |
| Equity per share (SEK) | 48.15 | 48.39 | 40.34 | 40.28 | 38.18 | 39.18 | 37.43 | 36.19 |
| Cash flow for operating activities per share (SEK) |
3.91 | 0.44 | 1.54 | 3.15 | 2.56 | 0.72 | 2.32 | 2.56 |
| Half-year data | Q1-Q2 2016 |
Q3-Q4 2015 |
Q1-Q2 2015 |
Q3-Q4 2014 |
Q1-Q2 2014 |
Q3-Q4 2013 |
Q1-Q2 2013 |
Q3-Q4 2012 |
| Net sales (SEK m) | 433 | 355 | 347 | 309 | 281 | 266 | 235 | 186 |
| Order intake (SEK m) | 447 | 337 | 345 | 310 | 301 | 257 | 259 | 195 |
| Gross margin (%) | 60.1 | 60.2 | 62.3 | 62.5 | 62.0 | 63.5 | 61.7 | 58.8 |
| EBITDA (SEK m) | 73 | 63 | 73 | 70 | 56 | 55 | 50 | 35 |
| EBITDA (%) | 16.9 | 17.7 | 21.0 | 22.6 | 20.0 | 20.6 | 21.2 | 18.8 |
| Operating profit (SEK m) | 55 | 46 | 56 | 55 | 42 | 46 | 41 | 29 |
| Operating margin (%) | 12.7 | 12.8 | 16.2 | 17.9 | 15.1 | 17.2 | 17.4 | 15.8 |
| Return on capital (%) | 15.0 | 10.5 | 17.3 | 17.3 | 14.8 | 18.3 | 17.3 | 16.1 |
Earnings per share (SEK) 3.28 2.05 3.26 3.09 2.49 2.92 2.63 2.35 Equity per share (SEK) 43.82 39.26 37.80 35.69 33.69 31.97 30.31 29.08
4.36 4.69 3.24 4.88 3.38 5.00 2.92 3.91
(SEK)
Operating profit before depreciation EBITDA for the last twelve months totaled to SEK 136 m (143), equivalent to an operating margin EBITDA of 17 % (22). Operating result EBIT for the last twelve months amounted to SEK 101 m (111) corresponding to a 13% (17) EBIT margin. Currency effects related to income and expenses had a SEK 9 m positive impact on the operating result compared to the previous 12 months.
During the recent 12 month period the acquired eWON contributed with SEK 17 m including amortization on acquired assets and acquisition costs.
The operating profit before depreciation EBITDA for the first six months 2016 totaled to SEK 73 m (73), corresponding to a 17 % (21) EBITDA margin. Operating result after depreciation EBIT for the first six months totaled SEK 55 m (56) corresponding to a 13 % (16) EBIT margin. Changes in exchange rates related to income and expenses had a SEK 1.0 m positive impact compared to the same period the previous year.
During the first six months the acquired company eWON, considering depreciation on allocated overvalues and acquisition expenses, had a SEK 17 m positive impact on the Group operating result. The costs related to the acquisition amounted to SEK 2.5 m.
The operating profit before depreciation EBITDA for the second quarter 2016 totaled to SEK 44 m (33), corresponding to a 19 % (19) EBITDA margin. Operating result after depreciation EBIT for the second quarter totaled SEK 35 m (24) corresponding to an 15 % (14) EBIT margin. Changes in exchange rates related to income and expenses had a SEK 0.3 m positive impact compared to the same period the previous year.
During the second quarter the acquired company eWON, considering depreciation on allocated overvalues and acquisition expenses, had a SEK 12 m positive impact on the Group operating result.
At the end of the second quarter the Spanish company Intesis Software S.L. was acquired. The operations in the Spanish company did not have an effect on the second quarter result of the Group. Related SEK 2.5 m in acquisition costs is included in the reported result for the period.
The two graphs above show operating result EBITDA and EBIT per quarter. The bars refer to the scale on the left axis. The line shows operating result for the last 12 month period referring to the scale on the axis to the right.
The Group's equity amounted to SEK 562 m (431). The total number of shares at the end of the period was 11,704,717. In the new issue carried out in connection with the acquisition of eWON in February 2016, 382,317 new shares in HMS Networks AB were issued, which increased equity by SEK 38,232 in share capital and SEK 93 m in share premium. The Group's equity/assets ratio amounted to 41 % (51). In connection with the share saving program initiated during 2013 the Company has acquired 31,000 of shares in HMS Networks AB up until June 30, 2016.
| Change in Group Equity | |||
|---|---|---|---|
| (SEK 000s) | Jun 30 2016 | Jun 30 2015 | Dec 31 2015 |
| Balance at 1 January | 455,482 | 422,599 | 422,599 |
| Total comprehensive income for the period | 41,415 | 35,771 | 59,376 |
| Issue of new shares | 93,285 | 0 | 0 |
| Share-related payment | 1,133 | 964 | 1,737 |
| Dividends | -29,184 | -28,229 | -28,229 |
| Closing balance | 562,131 | 431,105 | 455,482 |
The tax charge for the first six months was SEK 15 m (12). The tax charge for the current period has been calculated on the basis of the tax situation applying to the Group at present and the profit development of the reporting entities belonging to the Group.
Assets and liabilities in foreign currencies are revaluated at closing date. Currency hedging contracts are revaluated at the date of closing and are also affecting the result on the date of expiration. Changes in book value due to revaluation of operating balance sheet items and currency hedging contracts are disclosed as other operating income and other operating expenses. Changes in book value related to net-investments are disclosed under the Company statement of comprehensive income. Changes in book value related to assets in foreign currencies i.e. liquid funds, are disclosed as financial income and expenses. Net sales and expenses are affected by changes in exchange rates. This will have an impact on income and costs.
Net sales for the first half year consist of 60 % in EURO, 24 % in USD, 9 % in Japanese Yen and 7 % in SEK and other currencies. Cost of goods sold consists of 58 % in EURO, 20 % in USD and 1 % in Japanese Yen. Operating expenses consist of 43 % in EURO, 13 % in USD, 4 % in Japanese Yen and 40 % in SEK and other currencies.
The Group applies a policy for currency hedging described in the annual report.
Cash flow from operating activities during the first six months amounted to SEK 51 (37).
The investments in tangible assets for the first six months totaled SEK 4 m (3). Investments in intangible assets totaled SEK 15 m (8) and comprise to a material part capitalization of expenses related to the development of technology platforms. Depreciation on capitalized development costs during the period amounted to SEK 9 m (9).
The acquisition of IXXAT in February 2013 generated a SEK 255 m overvalue before tax for the Group of which SEK 144 m is allocated to technology platforms, customers and brand name included in the acquisition. Estimated annual amortization of acquired overvalue amounts to about SEK 7 m.
The acquisition of eWON in February 2016 generated, according to the preliminary acquisition analysis, a SEK 232 m overvalue before tax, of which SEK 97 m is allocated on brand name and customers included in the acquisition. Amortization on overvalues acquired is estimated to SEK 1.5 m annually. Amortization on overvalues acquired was recognized with SEK 0.6 m during the first six months 2016.
The acquisition of eWON was financed by issuing 382,317 shares in HMS Networks AB and by a bank loan of EUR 19 m. The acquisition of Intesis Software S.L. was financed by a bank loan of EUR 16 m. The bank loans are amortized with, in total, EUR 6.4 m annually. At the end of the period the loans related to the acquisitions amounted to EUR 33 m.
In total SEK 28 m (18) was amortized during the first six months 2016. At the end of the period the cash equivalents totalled SEK 76 m (17) and unutilized credit facilities SEK 3 m. The Group's net debt amounted to SEK 498 m (221).
During the second quarter dividend was paid out, in total SEK 29 m.
The Parent Company's operations are primarily focused on Groupwide management and financing. Apart from the Group's CEO, the Parent Company has no employees. The operating profit for the first quarter 2016 amounted to SEK 0 m (0). Cash and cash equivalents amounted to SEK 0.4 m (0.3) and borrowing amounted to SEK 0 m (0).
HMS Networks AB (publ) is listed on the Nasdaq OMX Stockholm Mid Cap list, in the Information Technology Sector. The total number of shares amounted to 11,704,717 whereof 31,000 shares are held by the Company.
The Company has launched four share saving programs. Based on a decision by the Annual General Meeting permanent employees are offered to save in HMS shares in an annual share saving program. Between 47 % and 60 % of the employees opted to participate in the respective program. If certain criteria's are met the Company is committed to give the participant a maximum of two HMS shares for every share saved by the employee. As of June 30, 2016 the total number of shares saved amounted to approximately 60,000.
On 5 February 2016, the Group acquired 100 percent of the share capital in the Belgian company, eWON SA. eWON was founded in 2001 and its head office is in Nivelles, Belgium. Along with the subsidiaries in USA and Japan, eWon offers communications products and services for remote access of industrial applications and controllers (PLC), data collection applications and cloud-based software.
The acquisition price amounted to EUR 29 m on a debt free basis, of which approximately EUR 10 m was paid by issuing 382,317 shares in the company and the remainder in cash. The acquisition was financed via a bank loan for EUR 19 m.
The acquisition generated consolidated goodwill of approximately SEK 232 m. The new issue of shares, which was in accordance with the authority of the Board to issue new shares granted by the 2015 AGM, had a dilutive effect of 3.27 %. The acquired company is included in the consolidated income statement and balance sheet for HMS as of 1 February 2016.
According to the preliminary acquisition analysis, the consideration, acquired net assets and goodwill amount to:
| Consideration: | SEK t |
|---|---|
| Cash and cash equivalents | 178,981 |
| Issued shares | 93,285 |
| Total consideration, preliminary | 272,266 |
| a result of the aquisition are: | Fair value, SEK t |
|---|---|
| Cash and cash equivalents | 26,783 |
| Accounts receivable and other recivables | 32,455 |
| Inventories | 19,253 |
| Property, plant and equipment | 21,551 |
| Intangible assets | |
| Customers | 15,045 |
| Brands | 81,675 |
| Deferred tax liabilities | -30,950 |
| Accounts payable and other liabilities | -30,228 |
| Borrowings | -28,971 |
| Deferred tax liabilities | -329 |
| Total identifiable net assets | 106,283 |
| Goodwill* | 165,982 |
| Aquired net assets | 272,266 |
*Goodwill is attributable to the employees and the high profitability of the acquired business. No portion of recognized goodwill is expected to be deductible for tax purposes.
On June 29, 2016 HMS acquires 100 % of the shares in the Spanish company Intesis Software S.L. Intesis was founded in 2000 and has its head office in Igualada close to Barcelona, Spain. The product offer of Intesis includes advanced gateway solutions and communication products in the area of building automation. The major part of the company´s net sales relates to solutions for automation of industrial buildings "Intesis Box". Intesis has a close cooperation with several leading manufacturers of air conditioning and systems for building automation globally. The company employs 30 people of which 9 are development engineers.
The acquisition price amounted to EUR 13 m on a debt free basis and an additional earn out of EUR 2 m. The acquisition was financed with a bank loan to the amount of EUR 16 m.
Preliminary the acquisition will generate a SEK 133 m overvalue in the Group. The acquired company is consolidated in the Group accounts as of June 30, 2016.
According to the preliminary acquisition analysis, the consideration, acquired net assets and goodwill amount to:
| Consideration: | SEK t |
|---|---|
| Cash and cash equivalents | 166,528 |
| Total consideration, preliminary | 166,528 |
| The assets and liabilities that were recognized as a result of the aquisition are: |
Fair value, SEK t |
| Intangible assets* | 132,615 |
| Other fixed assets | 1,628 |
| Current assets | 11,301 |
| Cash and cash equivalents | 28,807 |
| Non-current liabilities | -72 |
| Current liabilities | -7,751 |
| Aquired net assets | 166,528 |
*As of June 30 these are not distributed between different categories of immaterial assets, pending a purchase price analysis and determination of final purchase price.
Manufacturing
The HMS Group's long term growth is supported by a continued in flow of design-wins, a broader product offering especially within the Gateway product family and Remote Management, supplementary technology platforms from IXXAT, eWON and Intesis, a stronger customer focus and an expansion of the HMS sales channels ac cording to the existing strategy.
At present, the global market for HMS products is viewed as fluctu ating with cautiously positive undertones. The effect on the market for HMS product offer and currency effects are difficult to predict but HMS overall goals are unchanged: A long term average growth of 20 % per year and an operating margin above 20 %.
This report has been prepared in accordance with International Fi nancial Reporting Standards (IFRS) and IAS 34, for Interim Report ing. Amendments to existing standards, new interpretations and new standards that came into effect as of January 1, 2016 did not affect the Groups reporting as of June 30, 2016.
HMS continues to apply the same accounting principles and valua tion methods as those described in the most recent Annual Report. The parent company report is prepared in accordance with RFR 2, accounting for legal entities, and the Swedish Annual Accounts Act and accounting principles and the valuation methods as those described in the most recent Annual Report.
As of this interim report HMS applies the ESMA guidelines on al ternative key indicators (measures that are not defined in accordance with IFRS).
The HMS Group is exposed to business and financial risks through its operations. These risks have been described at length in the Com pany's Annual Report 2015. In addition to the risks described in these documents, no additional significant risks have been identified.
GROWTH STRATEGY – HMS's main focus is on organic growth. Expansion on existing markets will be through improved and extended product ranges, new technology, high level of service and new sales channels. A certain degree of growth can be through the selective acquisition of businesses that will be a valuable complement to the company's organic growth strategy.
DEVELOPMENT STRATEGY – The Company's core expertise is made up of an extensive understanding of industrial network communication.
PRODUCT STRATEGY – HMS markets six product lines, which to a certain degree are based on a common technical platform:
PRODUCTION STRATEGY – HMS maintains an in-house lowvolume production in Halmstad, Nivelles and Igualada. Volume production takes place in close partnership with subcontractors (in Europe and Asia) in order to achieve flexible costs and to make use of economies of scale.
MARKETING STRATEGY – The Anybus network interface cards are marketed and sold to players in industrial and infrastructure automation and Anybus Gateways to system integrators, machine manufacturers and end-users in industrial and infrastructure automation. IXXAT communication platforms are marketed and sold to machine builders of industrial applications, medical equipment and the automotive industry. eWON and Netbiter products are marketed and sold to a wide range of customers, from device manufacturers to owners of installations in need of remote management. Intesis products are marketed and sold to manufacturer, system integrators and end users in the area of building automation.
SALES STRATEGY – Sales take place via the company's sales offices on defined key markets in 10 countries. Sales on the company's other markets, in some 50 countries, take place via agents/distributors.
HMS has designed its business models to fit each market and product line. For the Embedded market, most business is via framework agreements (i.e. design-wins). The sales cycle is relatively long and the design phase is performed in close cooperation with the customer. After that, there is steady revenue over a long period of time. For Gateways and Remote Management and Control, the business model is more traditional, with a short business cycle and manufacturing based on customer orders. IXXAT and Intesis uses a mix of the above mentioned business models.
The Board of Directors and CEO assure that the interim report provides a true and fair overview of the Parent Company and the Group's operations, position and earnings and describes the material risks and uncertainties faced by the Parent Company and the Group.
Halmstad July 19, 2016
| Staffan Dahlström | Charlotte Brogren |
|---|---|
| Chief Executive Officer | Chariman of the Board |
| Henrik Johansson | Ray Mauritsson |
| Kerstin Lindell | Fredrik Hansson |
Anders Mörck
This interim report has not been reviewed by the Company's auditor.
Further information can be obtained by: CEO Staffan Dahlström, telephone +46 (0) 35 17 29 01 or CFO Gunnar Högberg, telephone +46 (0) 35 17 29 95
This information is such that HMS Networks AB (publ) is required to disclose in accordance with the Swedish Financial Instruments Trading Act and/or the Swedish Securities Market Act. The information was submitted for publication at 07.50 CET on July 19, 2016.
| Q2 2016 |
Q2 2015 |
Q1-Q2 2016 |
Q1-Q2 2015 |
Q1-Q4 2015 |
1507-1606 12 months |
|
|---|---|---|---|---|---|---|
| Net increase in net sales (%) | 31.5% | 24.8 | 24.9% | 23.6 | 19.1 | 20.2% |
| Gross margin (%) | 60.9% | 62.2 | 60.1% | 62.3 | 61.2 | 60.2% |
| Operating margin EBIT (%) | 15.0% | 13.7 | 12.7% | 16.2 | 14.5 | 12.8% |
| EBITDA (SEK 000s)*** | 43,570 | 32,827 | 73,254 | 72,687 | 135,517 | 136,073 |
| EBITDA (%)*** | 18.8% | 18.6 | 16.9% | 21.0 | 19.3 | 17.3% |
| Return on capital empolyed (%) | 3.6% | 3.6 | 6.6% | 8.4 | 15.4 | 11.5% |
| Return on total equity (%) | 18.4% | 13.7 | 15.0% | 17.3 | 13.7 | 12.4% |
| Working capital in relation to sales (%)** | 8.4% | 7.5 | 8.4% | 7.5 | 5.8 | 8.4% |
| Capital turnover rate | 0.72 | 0.84 | 0.78 | 0.83 | 0.84 | 0.71 |
| Debt/equity ratio | 0.89 | 0.51 | 0.89 | 0.51 | 0.39 | 0.89 |
| Equity/assets ratio (%) | 40.5% | 51.4 | 40.5% | 51.4 | 54.9 | 40.5% |
| Capital expenditure in property, plant and equipm (SEK 000s) | 2,480 | 2,091 | 4,110 | 3,143 | 5,042 | 6,009 |
| Capital expenditure in intagible fixed assets (SEK 000s) | 7,655 | 4,132 | 15,001 | 8,415 | 20,404 | 26,991 |
| Depreciation of property, plant and equipment (SEK 000s) | -2,429 | -2,050 | -4,672 | -4,052 | -8,095 | -8,714 |
| Amortization of intangible fixed assetes (SEK 000s)* | -6,314 | -6,595 | -13,381 | -12,585 | -25,838 | -26,634 |
| Number of employees (average) | 429 | 363 | 429 | 359 | 362 | 397 |
| Revenue per employees (SEK m)** | 1.8 | 1.8 | 1.8 | 1.8 | 1.9 | 2.0 |
| Equity per share, SEK | 48.15 | 38.18 | 43.82 | 37.80 | 38.88 | 43.37 |
| Cash flow from operations per share, SEK | 3.91 | 2.56 | 4.36 | 3.24 | 7.97 | 9.09 |
| Total number of share, average, thousands | 11,705 | 11,322 | 11,641 | 11,322 | 11,322 | 11,482 |
| Holding of own shares, average, thousands | 31 | 31 | 31 | 31 | 31 | 31 |
| Total outstanding shares, average, thousands | 11,674 | 11,291 | 11,610 | 11,291 | 11,291 | 11,451 |
*Includes amortization on allocated excess value in acquired subsidiaries.
**The key ratio has been translated into 12 months rolling value when applicable.
***Definitions of alternative key ratios is presented on page 14.
| (SEK 000s) | Q2 2016 |
Q2 2015 |
Q1-Q2 2016 |
Q1-Q2 2015 |
Q1-Q4 2015 |
1507-1606 12 months |
|---|---|---|---|---|---|---|
| Revenue | 232,127 | 176,515 | 433,201 | 346,766 | 701,676 | 788,110 |
| Cost of goods and services sold | -90,797 | -66,660 | -172,836 | -130,743 | -271,918 | -314,011 |
| Gross profit | 141,330 | 109,854 | 260,365 | 216,023 | 429,757 | 474,099 |
| Sales and marketing costs | -56,494 | -39,809 | -105,353 | -77,921 | -164,932 | -192,364 |
| Administrative expenses | -20,387 | -16,041 | -40,182 | -30,961 | -61,354 | -70,575 |
| Research and development costs | -28,053 | -27,640 | -57,240 | -51,116 | -103,116 | -109,240 |
| Other operating income | 0 | 672 | 0 | 5,429 | 1,230 | -4,199 |
| Other operating costs | -1,568 | -2,859 | -2,389 | -5,392 | 0 | 3,003 |
| Operating profit | 34,827 | 24,178 | 55,202 | 56,061 | 101,584 | 100,725 |
| Financial income | 3,407 | 0 | 3,424 | 0 | 2 | 3,427 |
| Financial costs | -2,258 | -4,295 | -5,495 | -6,772 | -14,025 | -12,748 |
| Profit before tax | 35,977 | 19,883 | 53,131 | 49,289 | 87,561 | 91,403 |
| Tax | -10,245 | -4,971 | -14,877 | -12,322 | -27,356 | -29,911 |
| Profit for the period | 25,732 | 14,912 | 38,254 | 36,967 | 60,205 | 61,493 |
| Basic earnings per share, SEK | 2.20 | 1.32 | 3.28 | 3.26 | 5.33 | 5.35 |
| (SEK 000s) | Q2 2016 |
Q2 2015 |
Q1-Q2 2016 |
Q1-Q2 2015 |
Q1-Q4 2015 |
1507-1606 12 months |
|---|---|---|---|---|---|---|
| Profit for the period | 25,732 | 14,912 | 38,254 | 36,967 | 60,205 | 61,493 |
| Other comprehensive income | ||||||
| Items that may be reclassified subsequently to income statement |
||||||
| Cash flow hedges | -1,479 | 2,193 | -1,197 | 1,556 | 1,787 | -966 |
| Translation differences | 10,037 | -1,897 | 7,951 | -9,154 | -11,244 | 5,861 |
| Hedging of net investments | -3,185 | 2,266 | -4,944 | 8,646 | 11,565 | -2,026 |
| Income tax relating to components of other comprehensive income |
1,026 | -981 | 1,351 | -2,244 | -2,937 | 658 |
| Other comprehensive income for the period, net of tax | 6,399 | 1,581 | 3,161 | -1,196 | -830 | 3,527 |
| Total comprehensive income for the period | 32,131 | 16,493 | 41,415 | 35,771 | 59,376 | 65,020 |
| (SEK 000s) | Jun 30 2016 | Jun 30 2015 | Dec 31 2015 |
|---|---|---|---|
| ASSETS | |||
| Goodwill | 565,406 | 395,591 | 394,167 |
| Other intangible assets | 480,938 | 248,421 | 245,835 |
| Property, plant and equipment | 37,666 | 17,569 | 15,300 |
| Deferred tax assets | 576 | 407 | 3,239 |
| Other long term receivables | 2,132 | 1,914 | 1,723 |
| Total fixed assets | 1,086,718 | 663,902 | 660,264 |
| Inventories | 81,128 | 58,496 | 55,810 |
| Trade and other receivables | 122,216 | 83,047 | 81,973 |
| Other current receivables | 21,216 | 15,910 | 13,313 |
| Cash and cash equivalents | 75,546 | 16,594 | 19,503 |
| Total current assets | 300,106 | 174,047 | 170,599 |
| TOTAL ASSETS | 1,386,824 | 837,949 | 830,863 |
| EQUITY AND LIABILITIES | |||
| Equity | 562,131 | 431,105 | 455,482 |
| Liabilities | |||
| Non-current liabilities | 477,841 | 178,977 | 158,142 |
| Deffered income tax liabilities | 103,086 | 68,563 | 72,242 |
| Total non-current liabilities | 580,927 | 247,540 | 230,384 |
| Interest-bearing current liabilities | 95,562 | 58,506 | 38,759 |
| Trade payables | 54,389 | 43,937 | 44,704 |
| Other current liabilities | 93,815 | 56,861 | 61,534 |
| Total current liabilities | 243,766 | 159,304 | 144,997 |
| TOTAL EQUITY AND LIABILITIES | 1,386,824 | 837,949 | 830,863 |
| (SEK 000s) | Q2 2016 |
Q2 2015 |
Q1-Q2 2016 |
Q1-Q2 2015 |
Q1-Q4 2015 |
1507-1606 12 months |
|---|---|---|---|---|---|---|
| Cash flow from operating activities before changes in working capital |
39,965 | 20,417 | 54,623 | 49,966 | 96,808 | 101,465 |
| Cash flow from changes in working capital | 5,644 | 8,061 | -3,962 | -13,376 | -6,796 | 2,618 |
| Cash flow from operating activities | 45,609 | 28,478 | 50,661 | 36,590 | 90,012 | 104,083 |
| Cash flow from investing activities | -129,376 | -6,144 | -290,230 | -11,803 | -25,398 | -322,671 |
| Cash flow from financing activities | 110,679 | -17,789 | 294,484 | -25,916 | -62,872 | 276,374 |
| Cash flow for the period | 26,913 | 4,545 | 54,916 | -1,129 | 1,742 | 57,787 |
| Cash and cash equivalents at beginning of the period | 47,652 | 12,500 | 19,503 | 17,629 | 17,629 | 16,594 |
| Translation differences in cash and cash equivalents | 981 | -451 | 1,127 | 94 | 132 | 1,165 |
| Cash and cash equivalents at end of period | 75,546 | 16,594 | 75,546 | 16,594 | 19,503 | 75,546 |
*The impact on the Group's cash and cash equivalents related to the acquisition of eWON amounted to SEK -152 m in Q1 2016, net of eWON's liquid funds. Cash and cash equivalents in eWON amounted to SEK 27 m.
**The impact on the Group's cash and cash equivalents related to the acquisition of Intesis amounted to SEK -119 m in Q2 2016, net of Intesis' liquid funds. Cash and cash equivalents in Intesis amounted to SEK 29 m.
| Revenue per region (SEK 000s) |
Q2 2016 |
Q1 2016 |
Q4 2015 |
Q3 2015 |
Q2 2015 |
Q1 2015 |
Q4 2014 |
Q3 2014 |
Q2 2014 |
Q1 2014 |
Q4 2013 |
Q3 2013 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EMEA | 144,356 | 121,420 | 99,757 | 109,576 | 104,637 | 104,580 | 99,014 | 97,567 | 90,601 | 91,628 | 78,378 | 89,455 |
| Americas | 48,548 | 46,424 | 40,938 | 38,898 | 37,248 | 39,999 | 33,123 | 30,157 | 27,519 | 27,291 | 26,359 | 30,592 |
| Asia | 39,223 | 33,230 | 34,379 | 31,362 | 34,629 | 25,672 | 24,181 | 24,592 | 23,330 | 20,207 | 21,021 | 19,920 |
| Income statement (SEK 000s) |
Q2 2016 |
Q1 2016 |
Q4 2015 |
Q3 2015 |
Q2 2015 |
Q1 2015 |
Q4 2014 |
Q3 2014 |
Q2 2014 |
Q1 2014 |
Q4 2013 |
Q3 2013 |
| Revenue | 232,127 | 201,073 | 175,074 | 179,835 | 176,515 | 170,251 | 156,318 | 152,316 | 141,451 | 139,127 | 125,758 | 139,967 |
| Gross profit | 141,330 | 119,035 | 105,993 | 107,742 | 109,854 | 106,168 | 96,867 | 95,991 | 87,618 | 86,369 | 80,056 | 88,704 |
| Gross margin | 60.9% | 59.2% | 60.5% | 59.9% | 62.2% | 62.4% | 62.0% | 63.0% | 61.9% | 62.1% | 63.7% | 63.4% |
| Operating profit | 34,827 | 20,374 | 14,440 | 31,083 | 24,178 | 31,884 | 17,977 | 37,150 | 20,928 | 21,527 | 13,443 | 32,226 |
| Operating margin | 15.0% | 10.1% | 8.2% | 17.3% | 13.7% | 18.7% | 11.5% | 24.4% | 14.8% | 15.5% | 10.7% | 23.0% |
| Profit before tax | 35,977 | 17,154 | 11,913 | 26,359 | 19,883 | 29,406 | 15,764 | 33,465 | 17,971 | 18,611 | 12,397 | 30,479 |
Sales by geographical area for the first six months 2016 are presented in the graph to the right.
Anybus Embedded products reached 44 % (51) of the Group's total sales, IXXAT 14 % (19), Anybus Gateway products 17 % (21), eWON products 20 % (3) and other revenues (services, Intesis and other) reached 5 % (6).
Most of the product groups are based on a common technology platform and are marketed and sold in the common sales channels. Therefore, no complete segment follow-up is reported.
| (SEK 000s) | Q2 2016 |
Q2 2015 |
Q1-Q2 2016 |
Q1-Q2 2015 |
Q1-Q4 2015 |
1507-1606 12 months |
|---|---|---|---|---|---|---|
| Revenue | 3,825 | 3,166 | 7,878 | 5,402 | 11,933 | 14,408 |
| Gross profit | 3,825 | 3,166 | 7,878 | 5,402 | 11,933 | 14,408 |
| Administrative expenses | -3,823 | -3,166 | -7,878 | -5,402 | -11,606 | -14,081 |
| Operating profit | 2 | 0 | 0 | 0 | 327 | 327 |
| Interest expense and similar income | 0 | 0 | 0 | 0 | 0 | 0 |
| Profit before tax | 2 | 0 | 0 | 0 | 327 | 327 |
| Appropriations | 0 | 0 | 0 | 0 | 8 | 8 |
| Tax | 0 | 0 | 0 | 0 | -141 | -141 |
| Profit of the period | 2 | 0 | 0 | 0 | 194 | 194 |
| (SEK 000s) | Jun 30 2016 | Jun 30 2015 | Dec 31 2015 |
|---|---|---|---|
| ASSETS | |||
| Financial fixed assets | 337,324 | 244,039 | 244,039 |
| Total financial fixed assets | 337,324 | 244,039 | 244,039 |
| Other receivables | 793 | 765 | 600 |
| Cash and cash equivalents | 434 | 300 | 276 |
| Total current assets | 1,227 | 1,064 | 876 |
| TOTAL ASSETS | 338,552 | 245,103 | 244,915 |
| EQUITY AND LIABILITIES | |||
| Equity | 153,974 | 90,249 | 90,443 |
| Untaxed reserves | 0 | 8 | 0 |
| Liabilities | |||
| Trade payables | 81 | 181 | 667 |
| Liabilities to Group companies | 181,014 | 152,415 | 149,890 |
| Other current liabilities | 3,483 | 2,250 | 3,915 |
| Total current liabilities | 184,578 | 154,847 | 154,472 |
| TOTAL EQUITY AND LIABILITIES | 338,552 | 245,103 | 244,915 |
Total assets less non interest bearing current liabilities and provisions, as well as total deferred tax liabilities.
Operating income in relation to total assets.
Operating income according to income statement excluding items affecting comparability.
Share of the profit after tax attributable to the parent company's shareholders in relation to the average number of outstanding shares.
Share of the profit after tax attributable to the parent company's shareholders in relation to the average number of outstanding shares with addition for the average number of shares that are added when converting the outstanding number of convertible securities and options.
Shareholders' equity in relation to total assets.
Long-term and current interest-bearing financial liabilities less financial assets (cash and cash equivalents).
Net debt in relation to shareholders' equity.
Number of registered shares less shares bought back, which are held by the company.
Operating income in relation to net sales.
Share of the profit after financial income in relation to the average capital employed.
Share of profit after tax attributable to the parent company's shareholders in relation to the average shareholders' equity.
Total equity attributable to the parent company's shareholders in relation to total outstanding shares by the end of the period.
Current assets less cash equivalents and current liabilities.
HMS presents certain financial measures in the interim report that have not been defined in accordance with IFRS. The company considers that these measures provide valuable additional information for investors and the company's management, as they enable the evaluation of relevant trends and the company's performance. As not all companies calculate financial measures in the same way, these are not always comparable with the measures used by other companies. These financial measures should therefore not be viewed as substitutes for IFRS-defined measures, unless otherwise stated.
Earnings before interest, taxes, depreciation and amortization.
| SEK t | Q2 2016 |
Q1-Q2 2016 |
1507-1606 12 months |
|---|---|---|---|
| Operating profit | 34,827 | 55,202 | 100,725 |
| Depreciationn/amortization | 8,743 | 18,052 | 35,348 |
| EBITDA | 43,570 | 73,254 | 136,073 |
HMS Networks AB (publ) is the leading independent supplier of products for industrial communication and remote management. Reported sales reached SEK 701 m in 2015. Development and manufacturing take place at the headquarter in Halmstad, Sweden, in Nivelles Belgium and in Weingarten, Germany. Local sales and support are handled by branch offices in China, Denmark, France, Belgium, Germany, Spain, India, Italy, Japan, UK, and USA. HMS employs over 460 people and develops and manufactures solutions for connecting automation devices and systems to industrial networks under the Anybus® and IXXAT® brand and products for remote management and control under the eWON® and Netbiter® brands. HMS is listed on the NASDAQ OMX in Stockholm, category Mid Cap, Information Technology.
"In a world where all devices are intelligent and networked… HMS is the leader in making industrial devices and systems communicate – for a more productive and sustainable world.".
"We drive innovation in collaboration with partners and customers creating leading technologies, products and solutions bringing value to real-world challenges".
HMS Networks AB (publ) Org.Nr. 556661-8954 Box 4126 | 300 04 Halmstad | Sweden Tel: +46 35 172 900 Fax: +46 35 172 909 http://investors.hms.se
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